The Waffle House Economic Indicator

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If you want to know what's really going on in the economy, you have to look beyond news sources. My newest economic insight came not from the Federal Reserve, but from a trip to a Waffle House restaurant.

On a recent visit with friends in Scranton, Pa., I enjoyed touring the city. I saw some beautiful neighborhoods and some depressing ones. It's often the simple presence or absence of a job that influences which neighborhood you live in.

At the restaurant, my friends and I were surprised to see waitresses not only taking orders and delivering dishes, but also sharing in the food preparation and dishwashing. We thought that seemed a bit much, but if you need a job, you often can't quibble. I started wondering whether it was hard to get a job in the area. Then I saw a job application form for a position with Waffle House. Here's what it touted:

• Weekly pay.
• Excellent earning potential ($6-$12 per hour including tips).
• Flexible schedules.
• A strong, growing company dedicated to people, both associates and customers.

Hmm. OK. What did I learn? Well, you'll get paid if you work there. That's a good start. But $6 per hour for 40 hours per week totals $12,480 per year; that hardly seems like "excellent earning potential" to me. Even at $12 per hour, that's just $25,000 annually -- not a lot to live on.

But perhaps the most interesting thing on the application was that two benefits had been crossed out: "Vacation pay" and "Insurance benefits available." So the company was seemingly reducing its benefits.

I looked up the local unemployment rate, and found that for June 2008, it was 6.1%, up a full 20% from a year earlier, and 30% above the national rate of 4.7%. So one out of every 17 Scrantonians are out of work. Presto -- the Waffle House had offered me a glimpse into the local economic condition.

Other economic indicators
When you're thinking about financial decisions, looking for signs of just how troubled our economy is can be helpful. If you sense a recession, for example, and expect interest rates to fall, you might want to put off refinancing your mortgage. But if you expect interest rates to rise, you might not want to tie up new money in a long-term CD. If you see growing unemployment, you might not want to leave your annoying job until you get another one lined up.

There are lots of useful economic indicators, many of which have little to do with waffles. For example, there's the market for initial public offerings (IPOs). The Wall Street Journal recently reported that July set a five-year low for IPO activity.

That suggests that the stock market isn't firing on all cylinders right now. When times are good, you'll see lots of companies going public, selling shares on the open market in order to raise money. Companies try to go public when the market is doing well, as they'll be likely to get more per share than during tougher times. Here are some of the biggest IPOs in recent years:

Company	Money raised in IPO	Year of IPO
Visa (NYSE: V)	$17.9 billion	2008
UPS (NYSE: UPS)	$5.5 billion	1999
CIT Group (NYSE: CIT)	$4.6 billion	2002
Blackstone Group (NYSE: BX)	$4.1 billion	2007
Goldman Sachs (NYSE: GS)	$3.7 billion	1999
Prudential Financial (NYSE: PRU)	$3.0 billion	2001
MasterCard (NYSE: MA)	$2.4 billion	2006

Due diligence
Keep an eye on economic indicators so as to bolster your portfolio and maximize the state of your personal finances,. Keep your eyes open for information in unexpected places. And learn more about a bunch of biggies here:

• Know Your Numbers: Leading Economic Indicators
• Know Your Numbers: GDP
• Know Your Numbers: Durable Goods
• Know Your Numbers: Consumer Price Index
• 4 Key Recession Indicators